EUR/USD Slides Below $1.0740 as Dollar Strengthens Amid US Election Uncertainty; What’s Next?
EUR/USD has been under significant selling pressure, dropping to $1.0731 as the U.S. dollar strengthens amid election uncertainty. With Donald Trump leading with 267 electoral votes over Kamala Harris’ 224, markets are reacting to the possibility of a Republican win.
The dollar’s strength has also been fueled by robust economic indicators like the ISM Services PMI, which came in at 56.0, well above the forecast of 53.8. This optimistic economic data has driven up U.S. Treasury yields, drawing capital away from the euro and other major currencies.
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In the eurozone, mixed economic data adds further pressure on the EUR. Germany reported a strong factory orders increase of 4.2%, above the forecast of 1.6%, signaling resilience in the manufacturing sector. However, services PMI data from Spain and Italy fell slightly below expectations, signaling uneven recovery in the eurozone’s services sector. Traders are also eyeing comments from ECB President Christine Lagarde at 3:00 pm, which could impact sentiment on the euro.
Technical Analysis: Key Support and Resistance Levels for EUR/USD
Technically, EUR/USD has broken below its pivot point of $1.0760, signaling a bearish trend. Immediate support sits at $1.0713, a level that, if breached, could push the pair toward $1.0679. Further support lies at $1.0637, which would be a key area to monitor if the bearish momentum continues.
Trading on the US election is big fun. #EURUSD fell more than 200 pips, #Bitcoin is above ATH, and Trump needs only 24 votes to win.#electionday2024 #Election2024 pic.twitter.com/xXvP3wPhRQ
— 4xGODz – In FOREX GODS we trust (@4xgodz) November 6, 2024
On the upside, immediate resistance is at $1.0798, with the next level at $1.0827. Breaking above these levels would be necessary for EUR/USD to reverse the bearish trend. The 50-day EMA stands at $1.0864, and the 200-day EMA at $1.0871, both reinforcing the bearish sentiment as they remain above the current price.
The RSI is hovering around 25, indicating an oversold condition, which may attract buyers in the short term. However, the broader trend remains under pressure from a stronger dollar and market uncertainty.
Market Outlook: ECB Speech and Key Data to Watch
ECB President Lagarde’s upcoming speech at 3:00 pm today will be closely watched for any hints on monetary policy direction. Market participants will be seeking guidance on the ECB’s stance amid ongoing eurozone economic pressures.
Investors are also monitoring further U.S. election developments, as the potential for a Republican win fuels dollar demand. For now, as long as EUR/USD remains below $1.0760, the outlook leans bearish.
Key Takeaways:
- Immediate Support: Key level at $1.0713; a break could accelerate losses.
- Resistance Levels: $1.0798 and $1.0827 need clearing for bullish reversal.
- RSI: Oversold at 25, which could attract short-term buyers.
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